INTERNATIONAL REAL ESTATE
FAQ
Is it a good time to buy property in Spain?
Experts believe now would be a good time to buy a property because there is a very active demand and a shortage of supply. This has been the norm in recent times and will not change, so, normally, prices will continue to rise in the coming months.
Experts believe it is a good time to buy a home in Spain
The perpetual question of whether it is the right time to buy a house may never be resolved, as subjective and personal factors always come into play. However, with the facts on the table and knowing a little about how the sector has evolved in other cycles, we can gauge whether the scenario is right for taking the plunge into the home-buying pool or not. According to a panel of experts consulted by the news branch, now would be a good time to buy a property because there is a very active demand and a shortage of supply, so if an opportunity appears, it would be better not to wait for mortgage conditions to improve, as there would be a risk of losing it. "If it is a good fit for you, now is the time to buy," say some of the sector professionals interviewed.
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In the first few months of 2024, the sector has evolved favourably. According to Joris Minten, CEO of Amazing Real Estate, "We are noticing significant purchase activity during the first quarter of the year, and in turn, the launch of new residential projects at a national level. All this means that demand continues to be very active."
"At the beginning of the year, we expected housing demand to pick up, gaining traction as lower mortgage rates were confirmed and the economy's growth picked up. More specifically, we expected a fall in transactions of around 11% by 2024, with 566,000 homes sold. However, the evidence from the first few months of the year shows a slightly more dynamic demand than we initially expected," says Mr. Minten.
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Catherine Duchateau, CEO of StarckGate, is of a similar opinion: "Demand has evolved very positively. It is growing by approximately 10% compared to the same period last year, which was a very good year in terms of sales. However, development activity is still very much in deficit. At the beginning of the year, we thought it was going to be a good year, but more in line with 2023. We are surprised by the strength of demand, above what was initially expected," she says.
A good time to buy a home.
Buying a house to live in does not have to be motivated by economic and circumstantial factors of the moment. It is a decision that should be motivated by personal factors, such as job stability, savings capacity, or basic needs. "That's why we always recommend decisions to be made independently of the current house price situation,"
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Joris Minten is a little more specific about whether to buy now or not: "There is no doubt that now is a good time to buy; there is a very active demand and a shortage of supply. This has been the norm in recent times and will not change, so, normally, prices will continue to rise in the coming months."
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Mrs May of the Spanish Estates Group is even more optimistic: "Except during the 2008 crisis, it has always been a good time to buy a property. At the moment there is a question of whether to buy now or wait for interest rates to fall, but if you wait it will probably end up costing more," she says.
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"Whether buying for home ownership or investment, there is no doubt that despite the high interest rates, now is a good time to buy. Firstly because, as we have already mentioned, supply is only decreasing and with prices continuing their upward trend, in the hypothetical case that rates are supposed to fall in the second half of the year, the lack of stock and the ease in obtaining a mortgage with better conditions will not help prices to fall, quite the opposite," says Mr. Minten.
"Moreover, if the demand for purchase is high, the rental demand is sky-high, among other things as a result of recent legislative changes, which means that the return on investment is in considerable percentages," he adds.
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For her part, Mrs Duchateau assures us that whether it is a good time or not, "prices are not growing with the intensity they have done in recent years. Therefore, if we are watching or waiting for a drop in prices, we believe it is not going to happen, so, although it is not the best time, there is nothing to indicate that next year will be any better in terms of prices."
Rates to drop before summer
Another of the great uncertainties to which future homebuyers are being exposed is the chance that interest rates could drop before the summer and the dilemma of whether it is better to buy now or later. For Joris Minten, "the evolution of house prices has not been in any way related to the evolution of interest rates and the increase in yields demanded on other types of assets."
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"That is why we think that new builds and general housing will continue to behave irrespective of the evolution of interest rates. In any case, it does seem reasonable to think that with cheaper financing costs, the price of housing could increase more quickly," the consultancy firm says.
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Mr. Minten continues to believe that the lack of stock means that "the problem of waiting for rates to fall is that the opportunity may be lost." "Therefore, for buyers, when a property is a good fit, they should not wait too long to buy," he argues.
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Mrs Duchateau has a similar outlook: "If you find a property that is a good fit in terms of surface area, distribution, services, location and price, it is certainly a good time to buy it. If you wait for better mortgage conditions you run the risk of losing it. On the other hand, financial institutions have already anticipated a drop in interest rates in the short term and have begun to improve mortgage conditions."
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George Farris, CEO of GGL-Investments, advises those who are looking, assuring that "the best time to buy was yesterday and the second best time is today." "The rates themselves are already adjusting, the mortgage market is already adjusting, predicting that there is going to be this drop in rates that everyone is taking for granted. There is starting to be a bit of a battle to get good mortgages, even fixed rates, which are currently below the price of money and which are very interesting rates to buy at when there is so little supply in the market. In a dynamic market like Barcelona, if you want to buy you have to be on your toes and, if you get an opportunity, go for it. The market is still fluid enough if you need to sell before buying and you dare to reserve. You can do it perfectly well because you know you are going to sell the flat immediately," he adds.
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For Mr. Minten, "With the regulatory measures that have been adopted to facilitate the change in financing, I believe that the question of interest rates becomes a secondary issue. The important thing is to be able to count on being able to grant such financing, and various economists agree that, if the solvency conditions are met, the flow of credit by the financial intermediaries will not be a problem."
"Furthermore," he adds, "we believe that the drop in interest rates will not be as abrupt as was predicted at the time, and therefore if you have found a home that fits what you are looking for, the question of interest rates should be irrelevant, if in the current context, you can be granted a loan."
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As for new builds, Catherine Duchateau explains that it is always more profitable to buy sooner rather than later, "as prices tend to be higher at the end of construction. That is why it is always better to buy earlier rather than waiting". "However," continues the expert, "this also applies to second-hand properties due to the current context of inflation and rising house prices. Even if rates come down after the summer, housing will not cost the same as it does today."
For Joris Minten, it is important to consider that "any decline is likely to be gradual". Even with a downward trend, rates are expected to remain above 2.5% for a considerable time. Moreover, in the current context of tight supply, buyers face limited options, which means that even if interest rates fall, the housing options available will not necessarily meet the needs or preferences of all potential buyers.
"Therefore, if a buyer finds a property that meets their requirements and is within their budget, it is wise to consider making the purchase now rather than waiting for market conditions to improve. In short, rather than trying to pre-empt developments, it is crucial to assess personal needs and current property market conditions to make an informed decision," concludes Mr. Minten.